I came across an article a while back that I found remarkable. It was a summary of an interview with former FED Chairman, Alan Greenspan, written by Tyler Durden of Zerohedge.com. A link to the article is below.
There are several remarkable statements attributed to Mr. Greenspan that I want to focus on in this post.
“The insurance industry as we know it – or at least the actuarial mathematics that underpin it – got rolling when two Scottish ministers in the 18th century devised a fund that would take care of their widows, and the actuarial methods they used were pretty spot on and have not really changed that much since. Insurance,” Greenspan said, “is really nothing more than saving for a rainy day. And insurance, by its construction, is a major form of savings for this country.”
“The whole structure of the industry is the mechanism by which you’re converting consumption into savings,” Greenspan said, “and the only way the economy can grow is to save.”
“Insurance,” he noted, “is the most formidable mechanism we have to save as a society, and the economics of insurance have not been given proper weight by economists in how they look at the world.”
Isn’t it interesting that one of the most famous central bankers in all of banking history is talking about saving as the ONLY way the economy can grow? Aren’t central bankers constantly trying to get us to save less and consume more?
Isn’t it also interesting that he calls insurance “the most formidable mechanism” to save? Not banks, not the stock market, not real estate, just plain, old fashioned, insurance. Saving and Insurance – strange bedfellows for a central banker to be sure…
What Mr. Greenspan’s comments underscore is that he understands a few things that the vast majority of the general public do not:
Savings = Capital. When we consume less than we produce, that difference is called savings. Those savings become a pool of capital that we can put to work to increase what we produce, otherwise known as “growth.” Properly deployed capital (savings) is the only way a society, an economy, a country, a business and even your own family can grow economically.
Debt cannot replace capital. Debt gives us the ability to consume more than we produce while maintaining an illusion of short term growth. But eventually, the interest on that debt eats up everything we can produce. Saving – consuming less than what we produce – is the ONLY path to real growth and prosperity whether you are a country, a business or a family.
The banking system (including the stock market) is a system based on debt. When we deposit a dollar at a bank, the bank uses our dollar to create about 9 new dollars out of thin air and then loan those newly created dollars to borrowers. It’s called fractional reserve banking. It’s the real reason a gallon of gas cost 24 cents in 1957 and about $3 bucks in 2017. An increase in the currency supply is the cause of the disease called inflation. Rising prices are just the symptom of the disease. A debt based, inflationary system, is not a suitable place to hold or deploy capital (savings).
Insurance is a system based on actuarial science. When we pay a dollar in insurance premium, it is still just a dollar to the insurance company. Insurance companies cannot create dollars from thin air. They cannot inflate the currency. They are not inflationary. Instead, they use actuarial science to deploy their dollars to produce more for their policy owners or shareholders (and the company) in the future. It’s a text book definition of saving. This is what makes it a “formidable mechanism” for saving – it is science based and non-inflationary.
The fact is that many savvy families and businesses have known for nearly two centuries that a properly structured insurance contract can be an excellent repository for savings – and the accumulation of capital. If you are feeling like maybe Mr. Greenspan knows something about insurance that you missed somehow, maybe it’s time to look into it?
Check out this short video by the best selling author of The Bank On Yourself Revolution and one of my fellow Bank On Yourself Advisors, Paul Nick, as they explain the real world rate of return comparison to other types of plans – using an actual policy purchased by Paul’s father in 1969. You just can’t argue with real world numbers!
In the Land of the Free we are raised to believe we live in the freest nation on the face of the earth. We are taught that the constitution guarantees this freedom and that the three branches of our government uphold it and our police and military forces defend it.
Have you ever tested the validity of these “truths?” I have… When was the last time you read through the bill of rights? Google it, it only takes a minute… Life, liberty, happiness, these are the attributes associated with freedom in the declaration of independence and the U.S. constitution.
The bill of rights further defines the rights of free people: freedom of speech, freedom of religion, right to bear arms, right to property and protection from unreasonable search and seizure, right to speedy trials, to face accusers and innocent until proven guilty, right to jury trials, protection from cruel and unusual punishment and excessive bails or fines.
Did you notice the subtle difference between the constitution and the bill of rights? The constitution and declaration are talking about some very lofty and high minded ideals, where the bill of rights describes the basic rights that free people should have. Do you see it yet?
A slave can have freedom of speech. A slave can be allowed freedom of religion. A slave can even be armed and allowed privacy and some property. In fact, a slave can have every right contained in the bill of rights and still be a slave. However, a slave can never have control and autonomy over his life, liberty and happiness. A slave can never truly be free.
Having rights and being free are two related but very separate things. The delusion we face in the land of the free is that because we have certain rights, we are free. How free are you, really?
The 9th and 10th amendments are the most fascinating to me:
The 9th amendment says that not even the constitution itself can deny any rights of the people.
The 10th amendment says that the federal government of the United States only has the powers specifically given to it by the constitution and if the framers missed something, then the people and the states get the benefit of the doubt, not the federal government, it still only gets the powers specifically given to it in the constitution.
The 9th and 10th amendments are saying pretty much the same thing, but the framers felt so strongly about it they said it twice, in two different ways, so as to be perfectly clear: The people are the supreme power in the United States of America! My, but we have certainly fallen far from the tree…
If you have ever found yourself in a dispute with the federal government – the IRS, the EPA, the DOE (education), the DOE (energy), SBA, etc., then you have probably realized that we “the people” are not the supreme power at all. In a very clever move that has played out over more than a century, the federal government has seized full and complete power over our money – and our freedom.
In a modern, technologically advanced society, power over the money is power over everything, including absolute power over you and yours. What would you do if tomorrow morning you woke to find your bank accounts empty, your retirement or brokerage accounts frozen and your wages seized?
As your food dwindled, gas tanks ran dry, mortgages and car payments went in arrears and the collection notices piled up in the mailbox, you, just like most of us, would do or agree to just about anything to turn the flow of money back on. Most of us can’t survive without it.
Many federal government agencies have the power to do exactly what I just described without going to court, without a jury trial, without a judgment, without much due process at all other than a few notices in the mail. You are guilty until proven innocent and proving your case will take years of red tape and bureaucratic stupidity, during which time you are completely powerless against them.
Hmmm, this sure doesn’t feel like what I thought being the supreme power of the land would feel like!
Now, some might say, “don’t get into a dispute with them and you won’t have to worry about it.” Of course, this is pure nonsense. It’s like telling the slave, “you can have free speech and free religion and so forth as long as you don’t disagree with me, piss me off and always do what I say… As long as you know your place and remember who the master is, you can do whatever you want.”
Slavery with benefits is not freedom! A debt laden, W-2 employee with a spouse, two kids, a mortgage, two car payments, a wallet full of credit cards and their only savings locked away in some government controlled retirement plan is little more than a slave (with benefits).
To take control of your money is to take control of your freedom. One way to do that is with a Bank On Yourself plan. Schedule a free financial analysis and strategy session today to learn how it could work out for you… Request a Free Financial Analysis Now…
Have you ever noticed how the terms freedom and liberty get thrown around a lot, especially when it comes to discussions of the U.S. constitution or members or the armed forces. Phrases like, “The constitution secures our liberty” or “our soldiers are defending our freedoms,” can often be read or heard. So, the question is, what exactly is “our liberty?” What are “our freedoms?”
Is it free speech, freedom of religion, right to bear arms and all the specific things listed out in the bill of rights? Or are all those “rights” just symptoms of freedom? What if they are just examples of the types of experiences truly free people should be able to have? The constitution pretty explicitly says that “the people” have rights that may not be explicitly listed in the constitution or bill of rights…
There is no question that the U.S. declaration of independence, constitution and bill of rights, are unique, first of their kind documents, created by a group of very enlightened framers. Having said that, I can’t help but notice that so many people seem to have completely missed the very spirit of what these genius framers were trying to do.
People seem to think that it’s the constitution that makes them free. They think that the U.S. government is some sort of holy and divine entity that makes Americans the freest people on earth. As if freedom and liberty are some kind of gift to be handed out to the most deserving.
Guess what? The government is not an entity unto itself – it’s a collection of human beings, including the collection of human beings who wrote and ratified the constitution. To say that a collection of human beings has the power to grant freedom and liberty to other human beings sounds suspiciously like, well, slavery…
Guess what else? You were born a free human being – freedom and liberty are your divine natural state. No human being, including any government or document written by any government, has the moral or ethical right to infringe upon your natural, divine free nature.
The constitution was not written to grant you freedom. It was not written to list out your liberties. It was written as an attempt to restrict the collection of human beings we call government from encroaching on the natural rights of all human beings to be free. The purpose of the constitution was to keep government in a very small box – and therein lies its genius! Freedom and liberty are not genius concepts, they are self-evident.
The genius is in recognizing that government ALWAYS expands its power through the forceful limitation of the divine human spirit of freedom. The genius idea was to try to use the laws of men to keep the government monster in its cage. Of course, we now know that though genius the constitution may have been, it failed miserably. The monster has clearly escaped its cage – and has reproduced exponentially – recruiting countless blind and ignorant humans to its ranks along the way…
So why is this distinction important? It is critically important because it is only when we can view the world through the clear lens of a divine, free human being, that we can recognize things for what they truly are. When we see government as the grantor and defender of our liberty, then we can more easily justify its actions as necessary or even as “right.”
If we perceive the government, through the constitution, is the grantor and defender of our freedoms, then perhaps we owe it some allegiance. When it says that it needs 10% or 25% or 50% of our money, we may say, “well, I guess that’s the price we have to pay for our freedoms.” When it spends that money to kill and maim millions of people under the auspices of “defending our freedom,” we may give it the benefit of the doubt, look the other way – or even buy in to the delusion of the moral high ground.
When we come to understand that we are already naturally free with or without it and that “it” is actually “them,” we can then perceive the reality that a collection of human beings is simply stealing from us (by force) for its own designs. We can only defend against a thief when we perceive the thief’s actions (or potential actions) as theft – as something fundamentally unethical, immoral, harmful and wrong…
When this shift in thinking occurs, we finally begin to structure our lives from a different standpoint. We reorganize our values and find that something we once took for granted, something like privacy, particularly financial privacy, has become of paramount importance.
It’s important, not because we have anything to hide or we are somehow criminal or unpatriotic (whatever that actually means…), but because we recognize the uncaged monster on the loose. We finally understand that our highest duty as a divine, free, human being is to defend against the monster, even to resist it with all our might. We don’t “owe” our allegiance to any one, let alone any government.
The framers of the U.S. constitution would roll over in their graves if they could hear the scores of American school children “pledging” their allegiance to any nation-state, especially the United States of America – because what the framers intended was that the government of the United States of America would pledge its allegiance to the American people, not the other way around.
We are the ultimate defenders and protectors of our own divine freedom and liberty. No other human being can morally grant it. No other human being can morally defend it – unless we first defend it in our own mind, body and soul. Recognizing and living by this simple, self-evident, albeit admittedly dangerous, truth is to truly embrace the ideals and spirit of the U.S. declaration of independence, constitution and bill of rights – regardless of what nation-state issues your passport…
I am asked from time to time if I am a certified financial planner (CFP). I am not. There is a lot of confusion out there about exactly what all these “credentials” mean, so if you are so inclined I have provided a detailed (and mind numbing) explanation of the financial services certifications and licenses below. However, here is the shorter answer…
What it really comes down to is that all these certifications and almost all the licenses described below revolve around stock market investing. I could make a case that the majority of the CFP, CFA and Securities Licensing training is essentially a Wall Street indoctrination program – coupled with some common sense personal finance wisdom that pretty much anyone, can get from any number of sources, virtually free…
My philosophy regarding the stock market is very simple. Today’s stock market is a rigged shell game and a house of cards. Most of us do not have the excess capital, the time or the sophistication to make stock market investing more than plain and simple casino gambling.
Sadly, I believe that is also true of the vast majority of financial planners out there. Instead of you gambling with your money, you are gambling on them, gambling with your money…
The bottom line is that unless you have reached a point where your future financial security is 100% certain, you have no business gambling with your resources. I call it Critical Capital Mass. After you achieve Critical Capital Mass and you have some extra money and want to take your chances in the Wall
Street casino, go for it! Maybe you’ll get lucky.
What this means is that about 99% of people should have ZERO dollars “invested” in stock market based assets – that’s mutual funds, 401K’s, IRA’s, Roth IRA’s, Brokerage accounts, etc., etc. So my only “investment” advice to almost everyone is: “Don’t put ANY money in these types of stock market based accounts and if you have money in these types of accounts already, get it out.”
Most securities licensed CFP’s are in the business of selling you stock market based products like IRA’s, mutual funds, etc. Some securities licensed CFA’s and CFP’s are in the business of helping you pick the right stocks, bonds, mutual funds, etc., and may “manage” your money for you. An RIA may also be CFA or CFP. RIA’s do all of the above, but get paid a fee for their time, versus a commission on the products they sell you.
These folks live and work in a Wall Street world. I do not. Therefore, I am not a CFP or a CFA or an RIA. I do not hold any securities licenses because I do not analyze, pick or recommend buying or selling any specific stock market based products. Again, my only “investment” advice is not to be in the stock market casino at all.
The only type of license that fits with my financial philosophies and my actual business practices is an insurance license. As for a fiduciary responsibility to put my client’s interest first; I just thought that was business (and decent human being) 101 and my plain ole insurance license already requires that of me anyway… And if you want to know how I get paid, just ask me…
First of all there is a big difference between a “certification” and a license. Licenses are issued by government regulatory agencies, “certifications” are awarded by private companies when someone has jumped through a particular set of hoops, established by that private company. Two common “certifications” are the CFP and CFA.
CFP – Certified Financial Planner: A professional certification for financial planners conferred by Certified Financial Planner Board of standards Inc., a private, non-profit corporation formed in 1985.
CFA – Chartered Financial Analyst: A professional certification offered internationally by the American-based CFA Institute (formerly the Association for Investment Management and Research, or AIMR), a private, for-profit, corporation formed in 1999.
A person can earn these certifications when they have completed a combination of college level study, CFP and/or CFA specific programs of study and some level of field experience working directly under an executive with higher level certifications.
A CFP or CFA may (or may not) also be an RIA.
RIA – Registered Investment Advisor: manages the assets of high net-worth individuals and institutional investors. He or she must register with the Securities and Exchange Commission (SEC) and any states in which he or she operates.
Pretty much every CFP, CFA and RIA will hold one of a dizzying array of securities licenses…
Securities Licensing: Licenses issued to financial professionals by FINRA (Financial Industry Regulatory Authority) or NNSA (North American Securities Administrators). There are various levels of securities licensing:
Series 6 (FINRA): allows its holders to sell “packaged” investment products such as mutual funds, variable annuities and unit investment trusts (UITs).
Series 7 (FINRA): Authorizes licensees to sell virtually any type of individual security. This includes common and preferred stocks; call and put options; bonds and other individual fixed income investments; as well as all forms of packaged products (except for those that also require a life insurance license to sell).
Series 3 (FINRA): Authorizes licensees to sell commodities futures contracts.
Series 63 (NNSA): All series 6 and 7 licensees must also carry this license, known as the Uniform Securities Agent License and is related to the Uniform Securities Act.
Series 65 (NNSA): This license is required for investment advisors who provide investment advice and money management services for an hourly or other type of non-commission related fee.
Series 66 (NNSA): Essentially combines the series 63 and 65 licenses into one.
Clear as mud?
If you’d like to discuss a financial strategy that is simple, predictable and backed by contractual guarantees, schedule a free consultation call with me. It’s just a casual 15 – 20 minute chat to find out if the strategies I use and recommend might be a good fit for you and your family.
Noah the Financial Advisor: “It’s going to rain. It’s going to rain a lot. I suggest you start preparing now, before it starts raining. I’m building a boat. I’d be happy to share my blue print with you.”
Everyone else: “Fpaw! It’s not going to rain. When will it start raining?
Noah the Financial Advisor: “I don’t know exactly – and that’s sort of my point. You won’t be worse off by having a boat – even if I’m wrong and it doesn’t start raining. But, I’m not wrong. Rain is inevitable.”
Everyone else: “All the kings and all their men say it’s unpatriotic fear mongering to talk about rain. They have statistics that say rain is very unlikely. They have contingency plans to take care of us if it rains. Besides, I ‘m already prepared, I have a dugout canoe somewhere in the basement.”
Noah the Financial Advisor: “Wow. A canoe? You’re going to die.”
Everyone else: “Yeah, well maybe you’re a nut case – or a terrorist. Your boat is stupid . Well, I’ve gotta run, gladiator games are starting soon and I want to get there before those clouds on the horizon move in.”
Noah the Financial Advisor: (Exasperated sigh…)
As a safe money oriented financial advisor, I feel Noah’s pain. I think I have similar conversations with people every single day. It makes me sad. My entire motivation for becoming a financial advisor is to help people get out of the way of the coming financial storm.
I have at least one conversation every day with someone who believes their money is safe because their portfolio is “diversified.” Every penny of their wealth is in a 401K or IRA. How is this diversified? Do you really think that having a few bond funds in the mix is protecting your nest egg from a massive market crash? That’s a bit like a canoe in a maelstrom!
The Infinite Banking Concept or Bank On Yourself is like the boat that will keep you safe when the rain starts and the flood waters rise. The time to prepare is now, because once it starts, it will happen very quickly. You could very well be drowning beneath your overturned canoe in the blink of an eye.
As a financial advisor, here’s the best financial advice I can give you. Think for yourself. Tune out all the kings and their men and their statistics and promises. Think through the worst case scenarios, then act in your own best interest. You will not be worse off for building your own financial ark. In fact, someday you may look back and find it was the wisest financial decision of your life.
You can take the first, painless step by scheduling a free financial analysis today…